Calif. Law Drains Value From Redevelopment Bonds: Insurer

Law360, New York (August 15, 2012, 10:08 PM EDT) -- Bond insurer Syncora Guarantee Inc. has sued California's government to overturn on constitutional grounds parts of a law that dissolved 400 agencies tasked with revitalizing communities, claiming the provisions interfere with contracts and drastically reduce money available to repay bonds.

The insurer's Aug. 1 complaint in Sacramento County court aims to bring down A.B. 26, a law that eliminated redevelopment agencies and redistributed property tax revenues that traditionally had flowed to them in order to pay off bonds funding community revitalization projects. Syncora's suit is the...